By Greg Trotter
Chicago Tribune – July 2017
Whole Foods Market’s cheaper, smaller-format 365 store concept that was scheduled to open in south suburban Evergreen Park in November likely will be delayed until sometime next year, according to village officials.
The larger question is whether Austin, Texas-based Whole Foods will continue opening 365 stores at all and, if so, at what pace once the company is owned by Amazon. The $13.7 billion planned acquisition of Whole Foods by Amazon is expected to close later this year.
Officially known as 365 by Whole Foods Market, the lower-cost concept was intended to appeal to shoppers on tighter budgets in an increasingly competitive grocery landscape. Only four 365 stores are currently open, but 22 more are in the pipeline, company executives have said. In some of those towns, there’s uncertainty on when and if the stores will open as planned.
Beyond the delay, Evergreen Park Mayor Jim Sexton said it’s now unclear whether Whole Foods will indeed open the 30,000-square-foot space in the redeveloped Evergreen Plaza as a 365 store or instead open a traditional Whole Foods store.
“I liked the (365) concept more, but if it ends up being a Whole Foods, so be it,” Sexton said.
Whole Foods spokeswoman Allison Phelps said she couldn’t say when the Evergreen Park store would open or what kind of store it will be until Amazon’s planned acquisition of Whole Foods closes.
“Our hands are tied. We’re in an extreme quiet period,” Phelps said.
Developer Lormax Stern didn’t respond to calls and emails.
Similar confusion reigns in Bloomington, Ind., where a 365 store initially was scheduled to open Aug. 1.
Alex Crowley, Bloomington’s director of economic and sustainable development, said he’s not holding his breath. There’s been little information from the developer Simon Property Group or from Whole Foods on when the store will open — or even if it will be a different retailer altogether, as is rumored to be the case there, he said.
“We’re flying a little bit in the dark here,” Crowley said.
Rod Vosper, vice president of new development at Simon, declined to comment.
And in Toledo, Ohio, the opening of a 365 store planned as the anchor tenant of a $140 million redevelopment in a popular retail corridor has been pushed back to next year, even as other mall tenants open for business.
Whole Foods informed Todelo officials of the delay before the announcement of the Amazon deal, said Brandon Sehlhorst, manager of real estate for Toledo.
“This is a big deal that Whole Foods is coming to town,” Sehlhorst said. “We remain hopeful.”
Whole Foods Market plans store for Evergreen Park
In a May earnings call with investors, Whole Foods CEO and co-founder John Mackey spoke optimistically about the 365 concept, even while acknowledging that two of the four stores open hadn’t performed to expectations. Going forward, the company planned to ramp up the number of openings while fine-tuning the model, Mackey said at the time.
“We take out so many costs. … It doesn’t have all the bells and whistles that Whole Foods has, but also has significantly lower capital cost,” Mackey said.
But, of course, things have changed since then. Many industry experts expect Amazon to help Whole Foods remove back-end costs and drive down prices even in the larger-format stores often dubbed “Whole Paycheck” by rueful shoppers.
Whole Foods has more than 460 stores in the U.S., Canada and the United Kingdom, according to the company’s website.
While the traditional Whole Foods stores yield larger profit margins, the smaller 365 stores provide a way to drive traffic and grow the store count, said Joseph McKeska, a former Jewel-Osco real estate executive who’s now president of Elkhorn Partners, an Oak Brook commercial real estate firm that specializes in retail.
“But does Amazon think it’s worth the investment of time, effort and money to grow that concept?” McKeska said. “That’s a big question mark.”